GBP/USD: DXY Strength May Cap Upside, Brexit Dependent

Technically speaking, there is still a case to be made for the Sterling to find buying interest off 1.2925–30 horizontal support. The latest BoE-induced spike breaking above the previous structure high at 1.2970–75 does offer some offer some technical credence that implies demand is re-emerging. Buyers need to hold this critical line at 1.2925–30 from which the rate should be lifted up towards the 1.2970–75 to keep re-calibrating the technical into a more neutral stance. However, be reminded that any rebound would still be trading into negative flows originating from correlated instruments such as the DXY or the UK-US yield spread, both supporting further declines.